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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
Mylan Inc has a M-score of -2.48 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Mylan Inc was -0.52. The lowest was -4.35. And the median was -2.48.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Mylan Inc for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 1.0847||+||0.528 * 0.9711||+||0.404 * 1.1062||+||0.892 * 1.0218||+||0.115 * 1.1923|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9941||+||4.679 * -0.0372||-||0.327 * 0.9245|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $1,679 Mil.|
Revenue was 1715.6 + 1808.526 + 1767.426 + 1701.701 = $6,993 Mil.
Gross Profit was 737.8 + 795.951 + 808.518 + 742.384 = $3,085 Mil.
Total Current Assets was $4,342 Mil.
Total Assets was $15,355 Mil.
Property, Plant and Equipment(Net PPE) was $1,705 Mil.
Depreciation, Depletion and Amortization(DDA) was $522 Mil.
Selling, General & Admin. Expense(SGA) was $1,438 Mil.
Total Current Liabilities was $2,649 Mil.
Long-Term Debt was $7,781 Mil.
Net Income was 115.9 + 180.232 + 158.908 + 177.689 = $633 Mil.
Non Operating Income was -4.6 + -0.463 + -70.597 + -7.192 = $-83 Mil.
Cash Flow from Operations was 268.1 + 417.86 + 414.662 + 186.441 = $1,287 Mil.
|Accounts Receivable was $1,514 Mil.
Revenue was 1631.5 + 1722.854 + 1801.786 + 1687.815 = $6,844 Mil.
Gross Profit was 693.5 + 742.316 + 793.122 + 702.637 = $2,932 Mil.
Total Current Assets was $3,950 Mil.
Total Assets was $11,885 Mil.
Property, Plant and Equipment(Net PPE) was $1,422 Mil.
Depreciation, Depletion and Amortization(DDA) was $552 Mil.
Selling, General & Admin. Expense(SGA) was $1,416 Mil.
Total Current Liabilities was $2,282 Mil.
Long-Term Debt was $6,450 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(1678.6 / 6993.253)||/||(1514.48 / 6843.955)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(795.951 / 6843.955)||/||(737.8 / 6993.253)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (4342.2 + 1705) / 15355)||/||(1 - (3950.394 + 1421.889) / 11885.032)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(551.837 / (551.837 + 1421.889))||/||(522.297 / (522.297 + 1705))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(1437.962 / 6993.253)||/||(1415.588 / 6843.955)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((7780.6 + 2649.3) / 15355)||/||((6449.998 + 2282.37) / 11885.032)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(632.729 - -82.852||-||1287.063)||/||15355|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Mylan Inc has a M-score of -2.48 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Mylan Inc Annual Data
Mylan Inc Quarterly Data